Making Informed Decisions in Uncertain Times - CF Insights · Making Informed Decisions in...

Helping Community Foundations during Economic Volatility

November 2008

Wendy Horton Valerie Bockstette Melissa Scott

Making Informed Decisions in Uncertain Times

About CF Insights Community Foundation Insights’ mission is to enable community foundations to make informed decisions about their operating models in order to achieve greater sustainability and community impact. We are pursuing this mission through the development of a centralized online database of financial, investment, and operational data that allows members to benchmark their founda-tions against a self-selected set of peer foundations. Formed as an initiative of the Council on Foundations’ Community Foundations Leadership Team, CF Insights operates as a division of FSG Social Impact Advisors and builds on FSG’s cost-revenue tools and research. Please visit us at www.cfinsights.org

© 2008 CF Insights

Table of Contents

Executive Summary 4

1. Introduction 6 – The Economic Crisis of 2008 – Methodology

2. Forecasting Key Benchmarks 8 – Assets – Contributions – Grants – Operating Budget – Full Time Equivalent Staffing

3. Managing Your Revenues 12 – Fees – Other Revenue Sources

4. Controlling Your Costs 14 – Operating Budget – Capital Expenditures – Partnerships

5. Serving Your Community 17 – Spending Policy – Grantmaking – Community Leadership

6. Communicating With Your Stakeholders 20 – Donors – Nonprofits – Staff

7. Short-Term and Long-Term Implications 22

Appendix 24 – A | Participating Foundations – B | Research Questions

Making Informed Decisions in Uncertain Times 3

Executive Summary

As the financial environment continues to be shaky and market values remain depressed for the foreseeable fu-ture, community foundations will have fewer resources available to cover their budgets and serve their communi-ties in the coming years. Concurrently, the economic downturn in the U.S. has created a heightened need for philanthropic support due to job cuts, foreclosures, and tight credit markets for both companies and consumers. To help community foundations address these twin chal-lenges of fewer resources and greater need, CF Insights conducted research by interviewing and collecting survey responses from a cross section of 73 community founda-tions during the month of October, 2008.

We believe that this time of crisis is also a time of oppor-tunity to demonstrate philanthropic leadership by making tough, but strategic choices about allocating resources in the coming years.

Key Findings Foundations are expecting their asset bases to de-cline in 2009 to levels about 10% below their 2007 state. Vis-à-vis their 2007 asset base, foundations on av-erage expected at the beginning of the year to grow by +6% in 2008. These forecasts have been reduced to –8%. Similarly, initial expectations for 2009 were to be up by 2% versus 2007, but again, those predictions have been downshifted to –10%. Contributions for fiscal 2009 have been forecast at only ~80% of fiscal 2007 levels, while grantmaking in fiscal 2009 is anticipated to be about 5% lower than in fiscal 2007. As a result, most foundations are cutting or consid-ering cutting their operating budgets, with staff re-ductions seen as undesired or a last resort. Most or-ganizations are planning to reduce their operating budg-ets. The key priority we heard from conversations and

survey responses is to retain staff. Thus, cuts are being made mostly in discretionary items, including marketing, travel, professional development, meeting expenses, etc. About half of the respondents that had planned capital expenditures in 2009 have put these on hold, relating mostly to IT. Further, most foundations are instituting hiring freezes, including leaving currently unfilled or re-cently vacated positions open. Foundations with operating reserves and/or spend-ing policies designed to work in both up and down markets are feeling less anxious. Anecdotally, the foundations we interviewed that had operating reserves and spending policies averaged over many quarters ex-pressed less angst around budget cuts and grantmaking reductions. The data collected from respondents con-firms this. Those foundations with an operating reserve and more than 12 quarters in their spending policy were projecting on average, nearly five times the growth rate in 2009 operating budgets versus 2007 compared to those foundations with no operating reserve at all. At this point, most foundations are not changing their fee structure or spending policies in reaction to the economic downturn; however, more attention is being given to thinking about new ways to raise money. Many foundations indicated that they had been evaluating their fee structures before the crisis hit and that current market conditions could propel decision making. Foundations generally feel little wiggle room in changing fee structure in order to stay competitive in their communities and with charitable gift funds of money management firms. Moreover, the majority of respondents are not currently pursuing new sources of revenue due to the economic uncertainty. Developing and diversifying revenue sources continues to constitute a culture shift in the industry; at the same time it appears that this crisis has spurred more interest in the topic. For both their own budgets, and the needs of the nonprofits and beneficiaries they serve, community foundations recognize that 2009 and especially 2010 will be challenging and many are re-tooling their grantmaking and leadership activities accordingly. Many of the foundations that participated in this research study are planning to undertake bold and creative meas-

While these times are challenging, community foundations are being

pushed to embrace new opportuni-ties in fundraising, budgeting, and

grantmaking

© 2008 CF Insights 4

ures to increase their impact on the community despite potentially reduced levels of giving. Some of these ideas are: Creating a “first responders” list of vital human

service organizations serving their community

Establishing an emergency relief / safety net fund

Making program related investments (PRIs) in the form of bridge loans to nonprofits

Shortening decision cycles or creating “fast track” grant categories

Convening larger funders in their community to create a coordinated response

Asking current grant recipients to shift funding to basic services

Supporting mergers of small programs into larger, more sustainable organizations

Providing operating support in the short-term to vital organizations that might otherwise fold

Commissioning a quick landscape scan of vital or-ganizations heavily reliant on government funding

Conducting targeted research to understand exactly how the economic downturn will impact their community

Please see section 5 of this paper for more detail on these ideas.

Foundations still have the opportunity to be proac-tive in their actions and communications with do-nors, staff, and their communities over the coming weeks. Many foundations are only starting to hear from donors, implying that there is time to develop a targeted communications plan. This plan should reassure donors that the foundation is prudent and well guided on the investment side, while at the same time, ensure that do-nors understand their giving is needed more than ever during these tough times. With the holiday giving season just around the corner, and many nonprofits relying on donations collected during this time, foundations are de-veloping creative avenues – such as letters to the editor in their local newspaper – to encourage people to give and recommend causes or organizations to give to. On the nonprofit side, it is critical to be transparent and candid with constituencies as foundations potentially re-tool grantmaking and community leadership activities. It is essential that grantees have as much advance notice as possible about any changes in grant budgets so that they can create contingency plans. Websites are a cost effec-tive and efficient way to keep current and potential grant-ees up to date on the foundation’s latest thinking. Finally, this time can be used as an opportunity to educate staff on the unique business model of community founda-tions. Conducting monthly meetings with staff and shar-ing relevant data points that impact the budget has emerged as a best practice. This will likely not be the last financial crisis this community faces in the next decade; a thoughtful communications plan developed for now will also come in handy the next time.


1. Introduction

CF Insights created this report to provide timely and ac-tionable information to the community foundation field about the ways their peers are responding to the current economic crisis.

The Economic Crisis of 2008 The financial markets continue to be volatile. The Dow Jones has lost 35% of its value since October 2007, hov-ering at a five year low toward the end of October. At the same time, the U.S. unemployment rate has been inching upwards since June of 2007, topping 6% in August of 2008, a level this country has not seen since 2003. In the last three months alone, the Dow lost over 20% of its value and seen daily price swings ranging from gains of 11% to losses of 8%, creating anxiety across the country, matched by similar market fluctuations around the world. Leading economists are not predicting a reprise from this slump in the near future. According to Nobel Prize win-ning economist Paul Krugman: “Unemployment claims are at steep-recession levels, and the Philadelphia Fed’s manufacturing index is falling at the fastest pace in almost 20 years. All signs point to an economic slump that will be nasty, brutish — and long…. The unemployment rate is already above 6 percent. It’s now virtually certain that the unemployment rate will go above 7 percent, and quite possibly above 8 percent, making this the worst recession in a quarter-century.”1 The rising unemployment rate is occurring at a time when the economy is already strained by the housing cri-

sis. According to Bloomberg News: “U.S. home prices tum-bled the most in at least 17 years in August and foreclosures in-creased to the highest level on record, reducing property values as the global credit crisis weakened the economy.”2 The Conference Board, a New York-based business re-search group, said on October 28, 2008 that its Con-sumer Confidence Index plummeted to 38 in October from an upwardly revised reading of 61.4 in September. Last month's decline brings the index to its lowest level

Figure 1: US Unemployment Rate vs. Dow Jones

Figure 2: Daily Change in Value of Dow Jones

1 Paul Krugman, “Let’s Get Fiscal”, New York Times, October 16, 2008. 2 Kathleen M. Howley and Dan Levy, “Housing Prices Tumble in August as Foreclosures Surge”, Bloomberg News, October 23, 2008. 3 “Consumer confidence at all-time low”, CNNMoney.com, October 28, 2008.

So far this year, the economy has lost 760,000 jobs, according to the

Labor Department's September pay-rolls

since its inception in 1967. According to the Consumer Confidence Survey, the percentage of Americans expect-ing business conditions to worsen over the next six months jumped to 36.6% from 21%. Those anticipating fewer jobs in the months ahead rose to 41.5% from 26.9% last month.3 While the economic slump affects every type of organiza-tion across the country and around the world, community foundations are uniquely impacted by volatile markets. First, their operating models are highly dependent on administrative fee income which is based on asset values. In addition, community foundations look to new contri-butions each year to build their asset bases. Finally, their communities are often highly dependent on the grants coming out of community foundation funds, particularly as other philanthropic funds and government budgets dry up. As a result of the crisis, many foundations are rightly ana-lyzing and potentially recalibrating their investment and

© 2008 CF Insights

2%

4%

6%

8%

J-92 J-96 J-00 J-04 J-08

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Unemployment Rate Dow Jones

-8%

-4%

0%

4%

8%

12%

8/1 8/16 8/31 9/15 9/30 10/15 10/30

Daily Change of Dow Jones

6

Figure 4: Sample Size Gross Asset Distribution

Lowering Your Asset Base

Diminishing Your Ability to Serve the Community When It Needs You the Most

Pressuring Your Operations

Reduction in Your

Fee Income

Lowering of Your Contribution Potential

Pressure on Your Operating Budget

Potential Reduction in

Your Ability to Make Grants

Figure 3: Impact of Financial Crisis on Community Foundations

24

6

17

7

19

<$50M $50M -$100M

$100M -$250M

$250M -$500M

>$500M


4 A full listing of the participating community foundations is shown in Appen-dix A of this paper. Those foundations that were part of the interview set are marked with an asterisk *. In addition, the data requested and qualitative ques-tions posed as part of this research are shown Appendix B. 5 We acknowledge that for several data points in this paper, we only have small sample sizes since not all respondents were able to provide data for every question and/or every year we requested; but we believe that the data and conclusions presented herein are directionally correct.

asset allocation strategies. While these considerations are of vital importance for community foundations, we as-sume that investment advisors and consultants are offer-ing ample advice and recommendations on this topic. Thus, we have chosen to focus our work on helping community foundations think about how to respond to the pressure on their operations, namely that fee incomes will likely shrink, contributions may slow down, adminis-trative budgets will be squeezed, and as a result of all of this, funding available for grants and community leader-ship activities may decline. All of this is happening in par-allel with a rise in community needs as counties across the country will face heightened unemployment and the related consequences of foreclosures and increased de-mand for basic service needs such as food and shelter. This paper reports on the ways that community founda-tions are forecasting key indicators such as gross asset values and budgets for the remainder of their current fiscal year, as well as the following fiscal year. This is in-tended to provide the field with a first look at bench-marks as community foundations continue to refine their assumptions. In addition, the paper will provide data and anecdotes around the specific actions community foundations are taking to manage their revenues, control their costs, serve their communities, and communicate with stakeholders. The overall intent is to provide real-time and practical information to the community foundation field.

Methodology The information for this research was collected from two sources. Interviews were conducted with 25 community foundations between October 15th and October 20th to gather anecdotes and ideas on the actions these founda-tions have taken, or are considering taking, related to their revenues, costs, grantmaking, and communications. In addition, these foundations were asked to submit rele-vant data regarding their last, current, and next fiscal years related to budgets and key indicators, as well as in-formation related to their fund type mix, spending poli-cies, and operating reserves and endowments if applica-ble. In parallel, the same information was asked of the field more broadly between October 16th and October 31st through an online survey distributed by the Council on Foundations. 48 foundations provided responses to the survey, creating a total dataset for this research of 73 foundations.4 This data set includes foundations of all sizes, as illustrated by the table below.5

7

2. Forecasting Key Benchmarks

Overview This section shows average data points across the sample set for five key indicators: Total Foundation Gross As-sets, Contributions Received, Grants Approved, Total Operating Budget, and Full-Time Equivalent Staff (FTE). All research participants were asked to provide these data points for five different time periods:

A. Fiscal 2007 Actual: Actual results from fiscal 2007 B. Fiscal 2008 Goal: The initial forecasts or goals for fiscal

2008 that were approved by the organization’s board C. Fiscal 2008 Current: For organizations with a fiscal year

end for 2008 that had already passed when this study be-gan, these numbers are actual 2008 results; for others, these numbers are the latest projections for the close of fiscal 2008

D. Fiscal 2009 Estimates as of August 1, 2008: Each organization’s estimates for fiscal 2009 as of August 1, 2008 (i.e., before the markets began their precipitous drop)

E. Fiscal 2009 Estimates as of October 13, 2008: Each organization’s estimate for fiscal 2009 at the time this re-search study began in mid October

In order to compare figures across foundations that have a wide range of absolute numbers for these indicators, each organization’s data points were compared to its own fiscal 2007 results. Using this method, each organi-zation starts with an initial data point of 100% for each indicator, which allows for comparison across organiza-tions and years. One final point: this data has not been normalized for differing fiscal year ends. However, of the organizations included in this analysis (i.e., those that provided five data points across the indicators), 68% have a fiscal year end of 12/31, 3% of 9/30, and the remaining 29% ended their fiscal 2008 on 6/30. Since all of the fiscal years begin in the latter half of the year, we believe that the differing fiscal year ends are not causing meaningful distortions in the data.

Total Foundation Gross Assets The average results for Total Foundation Gross Assets follow a distinct pattern of initial assumptions for growth, followed by downward revisions.

Initially, foundations6 expected their asset bases to grow by 6% between their fiscal 2007 and 2008 fiscal years. However, current estimates for fiscal 2008 point to an 8% decrease vis-à-vis fiscal 2007, implying that overall expectations were reduced by 14%. Initial estimates for fiscal 2009 pointed towards a recov-ery of 10% growth to reach assets levels slightly above fiscal 2007 results. However, currently foundations ex-pect gross assets at the end of fiscal 2009 to be slightly lower than estimates for the end of fiscal 2008. Another way to interpret this picture is as follows: Had assets grown at 6% per year since 2007 (a conservative assumption), 2009 levels would have been approximately 112% of 2007 levels. Compared to this, foundations are expecting to be 22% off, dropping from 112% to 90%.

Contributions Received Interestingly, the average results for Contributions Re-ceived paint a slightly different picture than for gross as-sets.

Figure 5: Total Foundation Gross Assets

100%

106%

92%

102%

90%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08

© 2008 CF Insights

6 The 27 foundations that provided total gross asset data for all five time peri-ods are included in these figures. Of these 27 foundations, 6 provided the same information for time period D (2009 estimate as of 8/1/08) and time period E (2009 estimate as of 10/13/08). Of the 21 foundations that provided an up-dated figure, the average change between time periods D and E was -14%.

8

Forecasting contributions is a challenge for most com-munity foundations. The data shows that initially, foun-dations7 estimated lower contributions for fiscal 2008 than for fiscal 2007, but that at present they are expecting to at least meet fiscal 2007 levels. For fiscal 2009, foundations were already planning for a reduced level of contributions, even before the markets began their steep decline this fall. This pattern makes sense in light of the fact that economic indicators were pointing towards slowed growth at the beginning of this year even before the market caught up with these fore-casts.

Grants Approved The pattern for Grants Approved is somewhat similar to the pattern for contributions received. Foundations8 initially expected fiscal 2008 grantmaking to be flat versus fiscal 2007 grantmaking, but are now pre-dicting a slight increase. The spending policy applied to asset values dampens the volatility of funds made avail-able for grantmaking, allowing for reasonable projections, at least in the short-term.

For fiscal 2009, grantmaking was already estimated to be reduced from initial fiscal 2008 target levels by 3%; this reduction has now been expanded. Another way to look at this picture is as follows: Had grantmaking at least grown with inflation by 3% per year, fiscal 2009 levels would have been at 106% of fiscal 2007 levels. Instead, grantmaking is expected to be at 94% of fiscal 2007 levels, implying an overall decrease of 12%. In other words, while these fluctuations appear small, for the nonprofits served by community foundations, the reductions will indeed be felt strongly.

Total Operating Budget The average Total Operating Budget pattern under-standably mirrors the Total Foundations Gross Assets pattern in terms of initial expectations of growth, fol-lowed by downward revisions. Foundations9 initially expected their budgets to expand by 17% in fiscal 2008, but have since reduced estimates towards only an 11% growth. For fiscal 2009, founda-tions initially predicted growth of 20% versus fiscal 2007 budgets, but this growth has been reduced to 14%. This implies that when including 3% inflation in cost calcula-tions, fiscal 2009 budgets will generally be kept flat versus fiscal 2008.

Figure 6: Contributions Received Figure 7: Grants Approved

100%

92%

100%

82% 83%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08

100% 100%

105%

97%94%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08


7 The 32 foundations that provided contributions received data for all five time periods are included in these figures. Of these 32 foundations, 17 provided the same information for time period D (2009 estimate as of 8/1/08) and time period E (2009 estimate as of 10/13/08). Of the 15 foundations that provided an updated figure, the average change between time periods D and E was -26% (excluding one foundation that revised its estimate by +700% due to special circumstances).

8 The 29 foundations that provided grants approved data for all five time peri-ods are included in these figures. Of these 29 foundations, 18 provided the same information for time period D (2009 estimate as of 8/1/08) and time period E (2009 estimate as of 10/13/08). Of the 11 foundations that provided an updated figure, the average change between time periods D and E was -5%.

9

Which budget categories, and at what level, foundations are reducing in their fiscal 2009 budgets is discussed in Section 4 of this paper. It is interesting to note how the estimates for fiscal 2009 budget differ depending on whether or not foundations have an operating reserve and the number of quarters in their spending policy.

Overall, most foundations do have an operating reserve and/or endowment as shown in figure 9. An operating / administrative reserve refers to funds, usually accumu-lated from operating surpluses over several years, which are available for use by the community foundation (for operating expenses) at the discretion of the board of di-rectors. An operating / administrative endowment refers to an endowed fund established to help offset operating expenses for the community foundation. In addition, 59% of foundations use a 12 quarter rolling average spending policy.

When looking again at fiscal 2009 total operating budget expectations versus fiscal 2007 total operating budgets actuals, but separated by operating reserve and spending policy quarter differences, a clear trend emerges:

Figure 10: “How many quarters are in your spending policy?”

Figure 8: Total Operating Budget

100%

117%

111%

120%

114%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08

51%

19%

21%

9%Neither

Operating Reserve

Operating Endowment

Operating Reserve &Endowment

Figure 9: “Do you have an operating reserve or endow-ment?”

2 2

34

9 10

1

4 8 12 16 20 >20

Figure 11: Fiscal 2009 Operating Budget Estimates versus Fiscal 2007 Operating Budget Actuals

124%

113%

105%

OperatingReserve and>12 Quarters

OperatingReserve and 12

or FewerQuarters

No OperatingReserve

© 2008 CF Insights

9 The 37 foundations that provided total operating budget data for all five time periods are included in these figures. Of these 37 foundations, 20 provided the same information for time period D (2009 estimate as of 8/1/08) and time period E (2009 estimate as of 10/13/08). Of the 17 foundations that provided an updated figure, the average change between time periods D and E was -10%.

10

Those foundations (11 total) that indicated having both an operating reserve and more than 12 quar-ters in their spending policy expect their fiscal 2009 operating budget to be 24% higher than their fiscal 2007 operating budget

Those organizations (11 total) that indicated having an operating reserve and 12 or fewer quarters in their spending policy expect their fiscal 2009 operat-ing budget to be 13% higher than their fiscal 2007 operating budget; this picture represents the “typical” foundation included in this research and thus closely mirrors the “typical” or average fiscal 2009 budget expectation

Finally, those foundations (8 total) that indicated having no operating reserve expect their fiscal 2009 operating budget to be only 5% higher than their fiscal 2007 operating budget, which accounting for 3% annual inflation implies that these organizations expect a net decrease in their fiscal 2009 budgets

While the sample sizes are small - not every foundation was able to provide all of the data points needed for this analysis - the results directionally indicate that operating reserves and a longer than 3 year spending policy timeline can give community foundations more stability in manag-ing and planning their operations.

Full Time Equivalent Staffing Across the board, community foundations have made staff retention a key priority going forward. While the previous charts indicate data in terms of dollar amounts, for full time equivalent staffing foundations were asked specifically about the number of people.

Foundations10 on average were expecting to grow their base of FTEs (full-time equivalents) by 10% between fiscal 2007 and fiscal 2008. It now looks as if this growth has been slightly scaled back with an expected increase of 7% at the end of fiscal 2008 versus fiscal 2007. For fiscal 2009, the pattern is almost the same. Before the financial market turmoil, foundations were planning to grow staff by 4% versus fiscal 2008, but now this growth will be slowed and fiscal 2009 year end levels will be al-most the same as expected or actual fiscal 2008 year end levels.

Total Operating Budget as % of Total Gross Assets The data provided by the sample set of community foun-dations enables a comparison of operating budget as a % of total gross assets. With the caveat that all foundations have differences in their operating models for a variety of mission-driven reasons, the 1% of budget-to-assets ratio has been a long-standing benchmark for community foundations.

The resulting trend11 is not surprising: in fiscal 2007, community foundation’s total operating budgets were 1.07% of their year-end gross asset base. This figure shows the rapid increase in the operating ratio as asset values decline. Current expectations for fiscal 2009 imply a ratio of 1.33% between total operating budget and total gross assets. Since the sample set includes a large number of small community foundations, these numbers may be higher than the industry average overall. However, since the same organizations are included in the analysis for each of the five time periods, the directional conclusion of an upward trend is valid.

Figure 12: Full-Time Equivalents (FTEs)

100%

110%107%

111%109%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08

1.07%

1.30%1.25%

1.33%

1.17%

A 2007 |Actual

B 2008 |Goal

C 2008 |Current

D 2009 |8/1/08

E 2009 |10/13/08

Figure 13: Total Operating Budget as % of Total Gross Assets


10 The 35 foundations that provided full time equivalent staffing data for all five time periods are included in these figures. Of these 35 foundations, 27 provided the same information for time period D (2009 estimate as of 8/1/08) and time period E (2009 estimate as of 10/13/08). Of the 8 foundations that provided an updated figure, the average change between time periods D and E was -6%. 11 The 27 foundations that provided total gross assets and total operating budget data for all five time periods are included in these figures.

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3. Managing Your Revenues

Overview Our research investigated two main ways that community foundations can manage their revenues during these un-certain times. First, all participants were asked whether or not they were going to change their fee structure due to the current economic climate. An overwhelming majority, 78%, indicated that they were not going to make any

changes for now. Secondly, the interviews and surveys inquired about the foundations’ plans to seek out new, less traditional, sources of revenue. Over two-thirds of foundations are not pursuing other revenue options, al-though many are interested in learning about potential opportunities. Fees As shown in the chart below, nearly 80% of respondents are not going to change their fee structure due to the eco-nomic turmoil. Many foundations indicated that they had been evaluating their fee structures before the crisis hit and that current market conditions could impact or accel-erate decision making down the road. A smaller group reported that meetings with their boards or relevant com-mittees were to take place in November, during which fee

“It’s like a perfect storm, with pres-sure to be competitive and bring in

more revenue”

structure plans will be discussed. Foundations generally feel that there is not much leeway in changing fee struc-ture in order to stay competitive vis-à-vis the charitable gift funds of large money management firms and compe-tition within the community.

Those organizations that are making changes are focused on discretionary and/or unrestricted funds. Some organi-zations have instituted minimum fees rather than mini-mum fund sizes. This method protects a base of fee in-come from all funds in an economic downturn.

Not surprisingly, the organizations that are contemplating changes are mostly on the smaller side of total asset size. While overall, 64% of the community foundations in the total sample set have assets below $250 million, 80% of the organizations that are planning to change their fee structure have assets below $250 million. Several interviewees noted that having done a Cost-Revenue study has helped with decision making around fee structures, as they had a clear picture of which funds were covering their administrative costs, and which are intentionally subsidized.

Figure 14: “Are you changing your fee structure?”

“Right now, no. We may need to [change fees] in the next year or so because we’re expecting our asset value to be lower. We try to leave

designated and advised fees alone, but do change discretionary funds”

22%

78%

No

Yes

36%20%

64%80%

Total StudySample Size

FoundationsChanging Fee

Structure

Assets<$250M

Assets>$250M

© 2008 CF Insights

Figure 15: Asset Size of Foundations Changing Fee Structure Relative to Sample Set

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Other Revenue Sources Similarly, the majority of respondents are not exploring new sources of revenue due to the economic uncertainty. Developing and diversifying new sources of revenue con-tinues to constitute a culture shift in the industry, al-though it does appear that this crisis has spurred more interest.

Those foundations that have successfully pursued gener-ating revenue from new sources cite similar avenues. Sev-eral have asked for grants or sponsorships for specific initiatives from foundations or corporations serving their

communities. Others have begun to charge nominal fees to cover the costs of workshops, speakers, and other community leadership activities. Moreover, program re-lated investments (or PRIs) have been used to generate incremental income that has the added benefit of being “recyclable” since loan principals eventually get repaid and can be redeployed. One foundation chief financial officer also stressed the importance of understanding the true costs associated with delivering a service or managing an initiative in part-nership with another organization or funder. In her case,

the costs of the travel involved in helping another foun-dation with a training initiative amounted to nearly $25,000 per year. In the past, the community foundation had absorbed this cost, but going forward, it will ask the co-funder to reimburse this expense. Now is the time for community foundations to encour-age donations from engaged stakeholders that are not currently donors, but who believe in the importance of the organization.

“We are looking to create an initia-tive fund for the economic recovery.

We already have a meeting with nonprofits scheduled and will be do-ing a variety of other convening ac-

tivities as well that we hope will demonstrate the value of the foun-

dation” 32%

68%

No

Yes

Figure 16: “Are you seeking new sources of funding?”

“At this point you take out the whole playbook”


Ideas for Increasing Revenues Expand initiatives that you know have donor appeal

Ask your board to step-up their giving in 2009

Seek outside grant funding or sponsorships for unique products and initiatives (e.g., Indicators

projects, affordable housing)

Institute minimum fees rather than minimum fund size, providing a base of fee income from all

funds

Partner with foundations or businesses for matching gifts or employer match

Find corporate sponsorship for conferences, seminars, workshops, or charge a nominal fee

Connect with 20 largest donors to request support to unrestricted programs

Conduct mission investing / program related investments (PRIs) since they are recyclable

Launch community leadership initiatives to attract new donors and invigorate existing donors

Rent out your space on weekends if you occupy a historic/attractive facility

4. Controlling Your Costs

Overview The research suggests that most foundations are focused more on trimming their expenditures than increasing their revenues as a result of the downturn in the econ-omy. We asked the research participants about three ar-eas related to their operating expenditures. First, we in-quired about whether or not foundations were planning on reducing their operating budgets, which 70% of re-spondents are indeed considering. Next, we asked organi-zations about their capital expenditure plans, and gleaned that half of the foundations that had planned such invest-ments are putting these on hold. Finally, the topic of partnerships as a way to reduce costs was proposed, but most foundations are not considering this option for now.

Operating Budget Most organizations are planning to reduce their operating budgets. The key priority we heard throughout our con-versations and survey responses is to retain staff. Many foundations mentioned that they place a high value on the strong staff they had carefully built over the last few years. Moreover, organizations that have been through this type of downturn in the past, most recently following 9/11, recognize the immense costs of having to re-recruit, re-hire, and re-train a new staff member once conditions improve, thus they are doing all they can do maintain current staff levels.

14 foundations provided detailed information about how budgets for fiscal 2009 had been reduced since August 1, 2008. While this is a small sample size, the average results paint a consistent picture with the qualitative responses provided by respondents.

Overall, budgets have been reduced by 7%. Within those reductions, personnel expenses have been reduced the least, while travel, conferences, meetings have been re-duced the most. Some of the budget reductions men-tioned in the interviews and survey are listed on the next page.

Figure 17: “Are you cutting your operating budget?”

Figure 18: Budget Cuts by Category

70%

30%

No

Yes

“We are asking staff to be as frugal at work as they are at home”

– 7%

– 8%

– 8%

– 17%

– 7%

– 5%

Total Budget

SpecialInitiative

Expenses

All OtherExpenses

Travel,Conferences,

Meetings

ProfessionalServices

PersonnelExpenses


Capital Expenditures About 60% of the sample set was not planning on capital expenditures during the current or next fiscal year. Of the 40% who were, about half are proceeding as planned, while the other half has decided to put plans on hold due to the economic environment. For the most part, organizations are putting expenditures related to information technology (IT) on hold, such as server upgrades, new computers, new donor management software, etc. On the real estate side, some foundations mentioned put-ting off moves that would create expensive build-out costs. However, other organizations mentioned that the

Figure 19: “Are you planning significant capital expendi-tures in your current or next budget year?”

61%

20%

19%Yes - But onHold for Now

Yes

No


Ways to Cut Costs

Non-Personnel

Shift your marketing and communications to electronic channels

Set printers to default to black & white and duplex printing

Acquire real estate or renegotiate lease now rather than waiting

Defer technology upgrades or other capital expenditures

Reduce budgets for professional development, conferences, trainings

Avoid unnecessary travel costs by using more telephonic or video conference meetings

Eliminate intra-staff meals; serve platters instead of boxed lunches for foundation meetings

Reduce annual events (awards, luncheons, open houses)

Ask staff to be more frugal when using and ordering office supplies

Reduce membership dues, or pay out of grants budget if possible

Cut down on use of consultants and temporary office help

Reduce postage by shifting to e-payments and eliminate overnight messenger use

Sort through and dispose of items held in storage to reduce storage costs or redeploy space

Pass cost of donor credit card transaction fees on to funds

Outsource your investment management to a university or larger foundation

Personnel

Reduce annual salary increase rate

Offer staff opportunity for unpaid leave

Temporarily reduce some benefits or perks

Establish a hiring freeze

Shift staff to roles that can be funded through grants

current climate has caused them to re-negotiate lease terms ahead of expiration to lock in lower rates with landlords who may be worried about their future ability to fill space. Moreover, some foundations that have leases expiring soon are taking advantage of the de-pressed housing market to look for real estate. Finally, while not technically a capital expenditure, many interviewees reiterated in this question category that staff positions that were going to be filled next year will now be put on hold. Partnerships Partnering with other organizations to reduce costs is an underexplored, and often dismissed topic for the com-munity foundations that participated in this research. Those organizations that have tried partnering have found it to be complicated and often unsuccessful. In addition, since many organizations have instituted hiring freezes, and are anticipating tight capacity for existing work, they told us this was not the time to explore taking on work for other organizations.

A few examples of successful partnership ideas we heard about are featured below.

20%

80%

No

Yes

If you don’t already own your build-ing, this may actually be a good

time to invest in real estate for your foundation

“No we have not considered such partnerships, but if anyone has

proven ideas let me know”

Figure 20: “Are you seeking out collaborations or part-nerships with other community foundations or other or-ganizations to help reduce operating costs?”


Partnership Ideas

Joining forces with other, similar community-based organizations to lower

insurance costs or workers compensation costs

Partnering with an area nonprofit to outsource event services

Sharing back-office space and functions with smaller philanthropic entities

Sharing costs with other local community foundations in the areas of advertising, donor devel-

opment, legal and professional

Finding partners to share costs of implementing community leadership activities

Outsourcing web-based public contribution credit card processing to Network for Good

Collaborating with area organizations to develop a study of giving in particular region

Providing accounting support to other community foundations

Partnering with other philanthropic entities to reduce investment management fees

5. Serving Your Community

Overview We asked the research participants about three areas re-lated to how they serve their communities: their spending policy, their grantmaking, and their community leadership activities. At this point, most respondents are not adjust-ing their spending policies; about half of respondents are making adjustments to their grantmaking in light of eco-nomic conditions; and most are maintaining their com-munity leadership investment levels. There are many creative and effective actions foundations can take during these challenging times to serve their community. On the next page we have summarized some concrete ideas assembled from the collective respondents of this research.

Spending Policy

The distribution of spending policies by the sample set is shown in the figure below. The high end for spending policies, including grants, administrative fees, and invest-ment fees, is 7.5%, while the low is 4.0%. Looking only at grants spending, the high is 5.2%, the low is 3.5% and the average is 4.6%.

“We are not making changes – we intentionally have a [spending pol-icy] philosophy designed for good

and bad times”

Most Foundations (73%) are not making changes to their spending policies in light of the current market turmoil.

However, for the set of foundations than have a higher than average grant pay-out ratio, the percentage of those making changes is slightly higher than for the set of foun-dations with lower than average grant pay-out ratios. Many foundations we spoke to have naturally discussed this topic, and interestingly, have considered both in-creases (to provide more funding to their communities) and decreases (to preserve the endowment), but in the end decided to stay the course. Foundations with floors and ceilings have found these to be helpful during sub-stantial swings in asset values. Some foundations, in order to counterbalance anticipated decreases in funds available for granting, but reluctant to increase grant spending per-centages, are asking donors for a special appropriation for specific causes related to emergency relief. Grantmaking About half of the community foundations that partici-pated in this research indicated that they are planning on changing their grantmaking in light of the current eco-nomic climate.

Figure 22: “Are you changing your spending policy?”

27% 34%25%

73% 66%75%

WholeSample

AboveAverage

Grant Pay-Out

BelowAverage

Grant Pay-Out

No

Yes

Figure 21: Distribution of Spending Policy Percentages

3%

4%

5%

6%

7%

8%

Grants Fee Admin Fee Investment Fee

“We are not changing our strategy, just temporarily shifting emphasis”


Ten Things You Can Do To Respond To Your Community

1. Create a “first responders” list: Understand and catalogue the human ser-vice organizations that will be vital in addressing the needs of your community’s population as the economy continues to deteriorate. This will help you channel your funding, and provide guidance to donors who inquire where they should best invest.

2. Establish an emergency relief / safety net fund: If you don’t already have one, create a specific fund for the core products and services your community will need, including food, shelter, medical services, heating oil subsidies, job training, etc. This is a great opportunity to tap new donors, raise more funds from existing donors, and affirm your position as a community leader.

3. Make program related investments (PRIs): Put your endowment to work for the good of the com-munity. Even stable nonprofits may face revenue shortfalls in the next two years. Provide a bridge loan to those organizations that are vital to your community and that will be able to raise funds again once the economy rebounds. This type of investment even produces income for you.

4. Shorten decision cycles or create “fast track” categories: Six month or longer decision cycles for your grant applicants will be more difficult than usual for them in the next two years. Consider shortening the cycle to two months if you can, or alternatively, for specific types of grants in core “safety net” service areas, create special fast track applications with a quick turnaround time.

5. Convene large funders in your community, including foundations and corporations: Your community will benefit the most in the coming years from an orchestrated approach by key funders. Call a meeting with the private, corporate, and leading individual funders in your area and coordi-nate your grant focus areas to ensure that all safety net needs are adequately addressed.

6. Ask current recipients to shift to basic services: If you have grantees that have already re-ceived commitments from you for non-core program expenditures, such as strategic planning, ask them to shift funding back to their basic activities for 2009, but assure them that planning funding will be available again in later years as you still consider this to be an important undertaking.

7. Support mergers and acquisitions (M&A): Many small nonprofits, particularly those that are fo-cused on only one core program, may be particularly challenged in the coming years. Identify the “gem” programs in your community and provide funding and advice to help them find a home in a more established and stable nonprofit organization.

8. Consider providing operating support in the short-term to vital organizations that might oth-erwise fold: If you have not provided operating support in the past, the next two years may war-rant a shift in mindset. Particularly for the most important human service providers in your area, it may be worthwhile to provide general operating grants if their other sources dry up.

9. Commission a quick landscape scan of vital organizations heavily reliant on government funding: Depending on where you are located, government budgets will likely be cut dramatically in the next two years. Understand which local agencies will be impacted and for those services you consider crucial, consider assisting in ways already mentioned, such as a bridge loan or general operating support.

10. Conduct targeted research to understand exactly how the economic downturn will impact your community: In order to inform your emergency relief fund, safety net focus, and convening topics, ensure that you know how the economic downturn will affect the businesses and residents in your community.


None of the actions that were described point to sudden changes in strategy. Instead, foundations are making small, yet meaningful changes around timelines, priorities, types of funding considered, etc. For example, one foun-dation has partnered with a United Way to create a pool of “salary funding” that nonprofits can tap to hire tal-ented people that have just been laid off from the for-profit sector. The list on the prior page highlights some of the most promising ideas we heard. The key theme throughout these responses is that foun-dations want to do what is best for their community. Re-spondents are also acutely aware that if the private foun-

dations in their communities stick to their 5% pay-out level, less money will be available next year, creating fur-ther pressure on their own giving. Thus, it is imperative that community foundations are strategic and thoughtful about every dollar that is spent or advised to be spent.

Community Leadership Foundations understand that community leadership will be critical in these times. Thus, most are staying the course on their commitments and plans; indeed, some are

even increasing their level of investment. Since a lot of community leadership activities, such as convenings and workshops, do not require “hard” dollars, foundations feel they can keep offering these vital services. For foun-dations facing staffing freezes or other reductions in ca-pacity, new ways to carry on community leadership will

need to evolve. Similar to grantmaking, there is an opportunity to re-tool community leadership activities based on the current fi-nancial and economic downturn. Community founda-tions can and should solidify their leadership positions by organizing convenings of nonprofits and residents around relevant topics, such as foreclosures, or inviting key community stakeholders, such as private foundations, philanthropists, small business associations, banks, etc. to a joint forum to discuss the situation and coordinate ef-forts.

These next weeks and months give community founda-tions a real opportunity to shine in front of potential do-nors and the media in terms of their deep understanding of community needs, and their unique ability to step in with funding, events, and knowledge.

“We will prioritize grant requests to ensure that basic human needs are

met to the fullest extent possible be-fore considering requests for other programs and will look at new, non-

conforming projects last”

“We will increase our current levels. We plan to bring groups together

around foreclosures, non-profit sus-tainability, prisoner re-entry, home-

less and other issues”

51%

49% No

Yes

Figure 23: “Are you changing how you support your non-profits?”

10%

72%

13%

4%

Increase

Maintain

Reduce

Don't currently do

Figure 24: “Are you changing community leadership in-vestment?”


6. Communicating With Your Stakeholders

Overview Most respondents indicated that their communications have been a “work in progress”. On the donor side, many foundations we spoke to were in the process of sending out their third quarter statements, and included messages about the economic crisis in this communication. On the nonprofit side, many foundations are naturally already hearing nervousness about the anticipated reduction in funds available for giving in 2009. Finally, foundations have used this crisis as an opportunity to educate staff in important ways about their business model and explain the impact of decreased asset values on the operating budget. In terms of communication tools, foundations have been creative, using their websites, electronic chan-

nels, webinars, print media, forums, conference calls, convenings, workshops, etc. as ways to reach out to con-stituents. Creating a thoughtful response plan now will help foundations better address the current crisis, and be more prepared to address the next one.

Donors The foundations that participated in this research have reported a vast array of responses to our question of what they are hearing from current or potential fundhold-

Figure 25: “Do you have a communications plan?”

“We believe open and transparent communication with all stake-

holders is key to understanding the full impact of this economy and

guiding informed decision making and giving”

ers about giving and grantmaking in light of the eco-nomic environment. A representative sampling of re-sponses is illustrated below.

In terms of communicating to donors, foundations are using several methods. Many included special messages in their third quarter statements, reminding donors that

markets are cyclical, that their foundation will survive this climate, and that their patience is required. Donors are being told that endowment funds are deliberately in-vested for the long-term. One foundation mentioned holding a focus group with donor advised fundholders to

13%

69%

18% We have a fullcommunications planin place

We are starting to planour efforts

We have not plannedanything

“Nothing yet”

“Once the Q3 letters go out we

expect to hear more”

“Our giving pipeline is

actually still full”

“They want to know what we are doing about asset

allocation”

“They are asking ‘Do I have enough money to give?’ ”

“Some don’t want to give at all in 2009”

Figure 26: “What are you hearing from donors?”

“You go to a meeting and tell people all will be ok – then you find out the

market dropped 10% during the meeting!”

© 2008 CF Insights

“We are on a parallel process, reaching out to our non-profit com-munity to gauge the impact of the economic climate on [the city we

serve]; at the same time we are con-vening donors and volunteers to discuss their perspectives on the economy and learn how we might

enhance fundraising efforts throughout the region to meet grow-

ing demand”

20

discuss the role that advised grants can play in light of current market conditions. Others are connecting donors directly to their investment consultants so they can hear about the foundation’s investment strategy first hand. Donors of large funds have been engaged one-on-one through personal phone calls or individual meetings. Foundations have pointed out that it is essential to use a mix of “positive” and “negative” messaging to donors. The positive messaging should be reassuring that the in-vestment policies put in place are designed to weather these volatile times and that the foundation continues to manage to its long-term investment strategy. The nega-tive messaging can focus on the fact that the community will need donors’ financial support more than ever in the coming year or years as other philanthropic funding sources decline and the economic downturn increases human service needs.

One foundation is planning to author a series of “letters to the editor” in local newspapers around the importance of giving, particularly during these times. These messages will be particularly important to send to potential donors throughout the community as gifts are often made around the upcoming holiday season. In that same vein, one foundation is giving specific guidance to donors on which kinds of support to provide this giving season, emphasizing the need for their “food and fuel” program. Overall, foundations should use the rest of November to be very proactive in reaching out to donors, and should be prepared to guide donors in how they can best con-tribute during these challenging times.

Nonprofits Not surprisingly, many community foundations are start-ing to hear from their nonprofits. Organizations are gen-erally nervous about funding drying up from all sources in the next year and beyond. One foundation reported a record number of letters of intent coming in early for

their November deadline. Several foundations reported that 3-4 nonprofits with agency endowments are asking for principal distributions while another foundation re-ported that the board of an agency endowment revoked its request for a special distribution to avoid liquidating in a down market. Those nonprofits that have relied heavily on financial services firms for funding are also feeling a unique pinch.

Despite the difficulties, there are many opportunities for community foundations to re-tool their grantmaking and community leadership activities in light of the economic downturn. Community foundations should embrace some of these ideas, and communicate early, often, and candidly with their constituent organizations about their granting plans so that nonprofits can make timely adjust-ments. Even if these adjustments are “bad news” for cur-rent or potential grantees, clear and timely notice will be critical so that nonprofits can adjust their own plans ac-cordingly. One community foundation has already given specific guidance to nonprofits about reducing budgets for next year. Similar to donor communications, foundations have ex-plored various channels to connect with their constituent organizations. Some have convened their nonprofit grantees to have a collective dialogue on the current eco-nomic conditions. Others have addressed concerns as phone calls have come in. Simply setting up a special sec-tion on the community foundation’s website with up-to-date messaging for nonprofits is a cost effective and effi-cient way to keep constituents abreast.

Staff As mentioned, one of the key themes coming out of all of this research is that community foundations are, above all else, seeking to hold on to staff. Thus, many founda-tions have emphasized that they have been open and transparent with their staff over the past weeks. Indeed,

this crisis has presented an opportunity to educate and inform staff members on the business model of commu-nity foundations, and demonstrate exactly how operating and grantmaking budgets will be impacted depending on fee structures and spending policies in place.

The bail-out plan included an exten-sion of the IRA Charitable Transfer through 2009 – making next year a

great year to give for those over 70.5 years old if markets recover

“We have a sense that nonprofits are keeping their fingers crossed. This is the time of year they have

galas, dinners, etc… we have heard of some trouble finding sponsor-

ships, as financial services firms are no longer sponsoring these events”

“I recommended to our grantees that they reduce their 2009 operat-

ing budgets by 10% to 15%”

“We are using our monthly staff meetings as an opportunity to keep staff apprised of impact. We have a dashboard that we review with staff

and trustees”


7. Short-Term and Long-Term Implications

Your Concerns Most community foundations that participated in this research are worried beyond just 2009, which leaves time to be proactive about this crisis.

Several themes emerged when participants were asked what they were most worried about. 2010 as the year to worry about: Participants frequently mentioned that while they are of course anxious about 2009, they see 2010 as the year that could mean more severely reduced budgets for themselves, and more dra-matically reduced grant funding available for their com-munity. This concern is driven by several factors, includ-ing anticipations for market values, expectations for how long the economic slump will last, and specifics of spend-ing policies. A spending policy averaged over many quar-ters can shield from sudden reductions in revenues and grantmaking, but can of course also mean a longer road to recovery if the downturn persists over the course of several years.

Generating enough fee revenue: In the words of one respondent: “If asset value does not come back, we are toast.” Depending on the minimum fee or fund structure, and the composition of funds, many foundations do fear that fee revenue will be impaired for 2009 and beyond. Many foundations spoke of dipping into, or even exhausting, their operating reserve in the next two years.

Having to reduce hours or lay off staff: “We would do EVERYTHING else prior to cutting people” is the general theme from community foundations. However, if the markets do not recover, these measures may have to be taken since personnel expenses make up the majority of operating budgets. The impact of hiring freezes: In addition, existing staff will be stretched in 2009 and beyond as open positions remain unfilled. For many foundations this means: “We have to stop doing as much and just tread water.” Effectively communicating to the Board: Foundation leadership knows that Boards will be anxious to hear about the response plans that have been put in place. Many of the respondents in this survey have not planned any drastic measures, but should be prepared to commu-nicate to Boards their deliberations and decisions for staying the course. We hope that the data and examples provided herein help provide peer comparisons to as-suage Board concerns. Continuing community leadership position: Finally, and in many ways, most importantly, community founda-tions are worried about sustaining their community lead-ership positions and providing for their communities in heightened times of need. Do they have the capacity, lev-erage, and financing to support and fortify their commu-nities?

What Does This All Mean For You? Every crisis is an opportunity: While we know you are always thoughtful in preparing annual budgets, now is the time to really question every expenditure and seek out more cost effective solutions where possible. Work closely and candidly with your whole staff to develop a list of cost cutting measures. Your community will need you: Rising unemployment and declining individual philanthropy will mean that the nonprofits in your community will have more needs to fill with fewer resources to do so. Consider implement-ing some of the suggestions for serving your com-munity that have been surfaced through this re-search.

8% 15% 50% 19% 8%

08 & 09 2009 09 & 10 2010 All

“We started preparing scenarios when the Dow was at 10,500 –

thought of 8,000 as something that would never happen… who knew?”

Figure 27: “Which year(s) are you most worried about regarding your budget?”



This won’t be the last crisis: The markets will recover; however, another crisis can hit anytime. While it is critical to respond to the short-term, this is also a time to think long-term and take precautions to be better prepared for the next crisis. Set up an operating reserve or endowment if you

don’t have one;

Make sure your spending policy works in good and bad markets;

Charge someone on the staff to develop an offi-cial response plan for donors, nonprofits, the media, and staff that can be drawn upon when the next crisis hits so you can emerge as a knowledgeable and proactive community leader

You have the benefit of being part of a unique and open learning community: This research project has shown yet again how much willingness exists in the com-munity foundation field to share knowledge with each other, in good times and bad. The entire field can benefit from shared learning, collaboration and improvement as it seeks to become more sustainable and elevate service to its communities. CF Insights is proud to continue con-tributing to and informing the knowledge base of the community foundation field. Thank you to those founda-tions that provided data and insights for this study; the Community Foundation Leadership Team (CFLT) for providing guidance and support; and CF Insights’ fun-ders and members for making this all possible. Continue the dialogue on this topic and reach out to CF In-sights if you have further ideas for how we can be helpful.

If you have ideas on this topic or want more infor-mation about this paper, please contact: Wendy Horton [email protected] Melissa Scott [email protected]

23

Appendix A | Participating Foundations

Community Foundation of Abilene

Adirondack Community Trust*

The Alaska Community Foundation* Arizona Community Foundation*

Community Foundation for Southern Arizona

The Community Foundation for Greater Atlanta

Baltimore Community Foundation

Berks County Community Foundation* Berkshire Taconic Community Foundation*

The Community Foundation of Greater Birmingham*

Blue Grass Community Foundation*

The Boston Foundation*

California Community Foundation*

Northern Chautauqua Community Foundation The Chicago Community Trust*

The Greater Cincinnati Foundation*

Cleveland Foundation*

Crawford Heritage Foundation

The Dallas Foundation* The Dayton Foundation

The Denver Foundation

Elkhart County Community Foundation

Evanston Community Foundation

Community Foundation of North Florida Community Foundation for the Fox Valley Region

Fremont Area Community Foundation

Grand Rapids Community Foundation

Greene County Community Foundation

Hancock County Community Foundation

Hartford Foundation for Public Giving Greater Houston Community Foundation

Central Indiana Community Foundation*

Johnson County Community Foundation*

Kalamazoo Community Foundation*

Greater Kansas City Community Foundation Community Foundation of Lorain County

Community Foundation of Madison & Jefferson County

The Mercer County Civic Foundation

Community Foundation for Southeast Michigan*

Greater Milwaukee Foundation* The Minneapolis Foundation*

Muskingum County Community Foundation

The Community Foundation for Greater New Haven*

Niagara Community Foundation

Orange County Community Foundation The Oregon Community Foundation

Outer Banks Community Foundation

Parkersburg Area Community Foundation

First Community Foundation of Pennsylvania

Petoskey-Harbor Springs Area Community Foundation

The Rhode Island Community Foundation The Community Foundation Serving Richmond & Cen-

tral Virginia*

Sacramento Region Community Foundation

San Antonio Area Foundation

The San Diego Foundation The San Francisco Foundation*

Santa Barbara Foundation

The Community Foundation of Santa Cruz County

Rancho Santa Fe Foundation

The Community Foundation of Sarasota County The Seattle Foundation*

Shasta Regional Community Foundation

The Community Foundation of Shreveport-Bossier

St. Paul and Minnesota Community Foundation*

Greater Tacoma Community Foundation*

Communities Foundation of Texas Triangle Community Foundation

Community Foundation of the Upper Peninsula

The Vermont Community Foundation

Community Foundation of Wabash County

The Winston-Salem Foundation Community Foundation of Southern Wisconsin

Greater Worcester Community Foundation

Note: Foundations that were interviewed are denoted by *


Appendix B | Research Questions

Quantitative High Level Data | For total gross assets; contributions re-ceived; grants approved; total operating budget; and FTEs please provide: Fiscal 2007 actual Fiscal 2008 initial approved goals

Fiscal 2008 actual or current projected

Fiscal 2009 estimate as of 8/1/2008

Fiscal 2009 estimate as of 10/13/2008 Fund Data | Most recent total gross asset estimate; fund-type mix; size of operating reserve if applicable; size of operating endowment if applicable

Detailed Data | For personnel expenses; professional services; travel, conferences and meetings; all other expenses; special initia-tive expenses; and total operating budget please provide: Fiscal 2007 actual Fiscal 2008 initial approved goals

Fiscal 2008 actual or current projected

Fiscal 2009 estimate as of 8/1/2008

Fiscal 2009 estimate as of 10/13/2008 Spending Policy | Elements of spending policy (% grants, % administrative fees, % investment fees); num-ber of quarters in rolling policy if applicable

Qualitative Revenues | Fees: Are you planning on revisiting your current fee structure due to the uncertainty in the finan-cial markets? Revenues | Fundraising: Are you seeking funding or reve-nue sources outside of your traditional model for 2008 and/or 2009? Costs | Operating Budget: What areas, if any, of your oper-ating budget are you considering reducing? Costs | Capital Expenditures: Are you planning significant capital expenditures in your current or next budget year (e.g., office moves, major technology upgrades)? Costs | Partnerships: Are you seeking out collaborations or partnerships with other community foundations or other organizations to help reduce operating costs? Spending | Policy: Are you planning on revisiting your current spending policy due to the uncertainty in the fi-nancial markets? Spending | Grantmaking: What changes, if any, are you making in how you serve your nonprofit community in response to the economic uncertainty? Spending | Community: How has the economic environ-ment changed your investment (financial and staff) in

community leadership (e.g., convenings, nonprofit capac-ity building)? Communication | In-Coming: What is your development staff or other senior management staff hearing from cur-rent or potential fundholders about giving and grantmak-ing in light of the current environment? Communication | Out-Going: What communication ef-forts are you undertaking to discuss the current economic situation with staff, fund holders, committees, board members, the community, etc? Other: What other measures you are taking on the reve-nue or cost side in light of the current state of the finan-cial markets? General: Which year(s) are you most worried about re-garding your budget and what are you most worried about regarding this budget / these budgets? Peers: What information about the decision making of your peers related to the current financial uncertainty are you most interested in? Best Practices: What is the most creative action in re-sponse to the economic situation you have observed ei-ther within your foundation or by a peer foundation?


Acknowledgements We would like to thank all of the community foundations who participated in this research for their candid input, speedy responses to our inquiry, and creative ideas. This research study is a product of the field, for the field, and could not have been possible without the willingness of community foundations to share with one another.

Authors Wendy Horton, CPA ([email protected]) is the Executive Director of CF Insights and former Chief Financial Officer of the Greater Milwaukee Foundation Valerie Bockstette ([email protected]) is a Consultant at FSG Social Impact Advisors Melissa Scott ([email protected]) is a Financial Analyst for CF Insights


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